SSLVC reports six months net loss attributable to shareholders of $40.14 million

February 14, 2020

SSL Venture Capital Jamaica Limited (SSLVC), for the six months ended December 31, 2019, reported revenues of $95.30 million versus $194.70 million reported in the prior year’s corresponding period. While for the quarter, SSLVC reported $44.28 million (2018: $136.19 million) in revenue. SSLVC stated that, “This shortfall was primarily due to a significant decline in sales at Bar Central Limited (BCL) which contributed approximately 70% of revenues for the 2018/2019 period.”

Furthermore, management noted, “For the half year ending December 2019, management spent significant time and effort focused on improving the internal financial management and control and governance, resulting in a slowdown in the sales focus in order to meet the Group’s objectives of complying with the JSE rules for relisting. With internal controls and financial management now improved, the company is looking to refocus its energies on growing revenues and to that end, signed an additional beverage distribution contract with the World Brands Division of the Grace Kennedy group towards the end of November 2019. This strategic partnership along with other strategic partnerships being pursued is expected to significantly impact the growth in revenues going forward.”

Notably, the SSLVC noted, “Blue Dot Data Analytics continues to grow revenues with the result for the quarter ending December 2019, showing an almost 100% increase in revenues over the prior year. It is expected that this trend will continue with the outturn from this company projected to be a 95% growth in revenues for the 2020 financial year.”

Cost of sales amounted to $85.29 million (2018: $157.50 million), thus resulting in gross profit of $10.01 million relative to $37.20 million booked last year. Gross loss for the quarter amounted to $6.31 million versus $21.31 million booked for the second quarter ended December 31, 2018.

Other operating income closed at $351,650 (2018: $28.51 million) for the six months period ended December 31, 2019. In addition, administrative expenses was $79.70 million in the six months ended December 31, 2019 compared to $125.32 million documented in the previous year.

Moreover, SSLVC reported that, “the 2nd quarter expenses were impacted by legacy transactions coming from activities that sought to address the governance and financial management issues that lead to the company being delisted in 2019 from the JSE.” In addition, “some of these expenses related to the settlement agreement that was made with Imaging Services to settle a breach of contract claim on the company in relation to a transaction entered into by the previous management which was subsequently terminated as it deemed not to be in the best interest of the company and its shareholders.”

Consequently, SSLVC recorded operating loss of $69.34 million versus a loss of $59.61 million reported in 2018. Operating loss for the second quarter closed at $48.08 million relative to $61.68 million reported for the same quarter of 2018. Finance cost for the year grew 291% to close at $7.01 million compared to $1.80 million reported in 2018.

The Company reported a net loss of $50.90 million versus a loss of $47.61 million reported in 2018. Net loss for the quarter amounted to $33.78 million (2018: $42.08 million).

However, net loss attributable to shareholders amounted to $40.14 million compared to a net loss attributable to shareholders of $33.41 million in 2018. For the quarter, net loss attributable to shareholders was $26.64 million (2018: loss of $33.18 million).

Management noted that, “these losses were primarily caused by the decline in sales from our Distribution Segment and high administrative expenses incurred for the period.”

Loss per share (EPS) for the period amounted to $0.10 versus a loss per share (LPS) of 0.08 the prior year, while LPS for the quarter amounted to $0.07 (2018: LPS $0.08). The trailing twelve months loss per share amounted to $11. The number of shares used in our calculations is 400,000,000. SSLVC stock price closed the trading period at a price of $ 1.10 on February 14, 2020.

Management stated, “The Group will continue to monitor operational and financial expenses with a view to reducing this figure going forward and to synergies across the group which is hoped will eventually translate to the bottom line.” Furthermore, “It is anticipated that for the second half of the financial year, the legal and professional fees will be much less thus the group is expected to see a repeat of this level of expenses going forward.”

Looking forward, “the Group will continue to combine efforts with the parent company’s management to develop a long-term plan to expand and build on the franchise by increasing the number of portfolio companies within the group and to drive revenues and profits and minimize risk through diversification. It is the Group’s intention to raise a suitable private equity fund targeting both local and international investors from which we will look to capitalize on opportunities in Fintech, Food and Beverage (Quick Service Restaurant), Hospitality and Sustainable Investments that will maximise shareholder value.”

Balance Sheets Highlights:

As at December 31, 2019, total assets amounted to $230.99 million down 21% from the $291.07 million booked in 2018. This decrease was mainly due to decreases in ‘Inventory’, ‘Receivables’, ‘Cash and Bank deposits’ which closed at $6.09 million (2018: $27.43 million), $50.20 million (2018: $68.60 million) and $7.05 million ($38.90 million), respectively.

Shareholders’ deficit closed at $108.57 million relative to shareholders’ deficit $37.36 million recorded in the prior year’s corresponding period. This resulted in a shareholders’ deficit per share of $0.27 (2018: $0.09).

Analyst Certification -This research report is for information purposes only and should not be construed as a recommendation. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.